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Demand Demand-Supply-SupplyShift.gif pg-11

As we've seen on the previous pages, several factors can cause supply curves to shift. The most common reasons for a shift in the supply curve of an individual firm are changes in production costs and changes in the market price of other goods.

The industry supply curve can shift for all the above factors and can also shift due to entry and exit of firms. Entry or exit can shift the industry supply curve even when existing individual firms don't change their behavior.

The table below summarizes the supply shifts we've discussed in this section.

Supply Shifts
Production CostsRise Supply Shifts Back
Production CostsFall Supply Shifts Out
Price of Other OutputRises Supply Shifts Back
Price of Other OutputFalls Supply Shifts Out
Other FirmsEnter Industry Supply Shifts Out
Other FirmsExit Industry Supply Shifts Back
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